Editorial: Death, Taxes, and Military Alliances

It has been difficult to determine what the calculus for Hungary has been since Sweden, faced with Russia’s war in Ukraine, turned its back on long-held neutrality to seek the comfort of a NATO security blanket. On the face of it, Hungary’s oft-repeated promise not to be the last to ratify, only to be proven to be just that, ought to have been embarrassing. But as one enormously experienced business leader put it to me (in different circumstances) just before Christmas, that is to make the mistake of applying rationality to the argument.

Let’s put one excuse to bed: Hungary’s leadership frequently said it supported Sweden’s bid, but, it added, Hungary’s lawmakers are sovereign, felt insulted by Swedish comments about the quality of Hungarian democracy, and they would need to be appeased. Yet, a motion to accept Sweden’s bid wasn’t even put on the parliamentary agenda until Turkey, the only other holdout, seemed to surprise everyone by suddenly dropping its veto. Fidesz, and specifically Viktor Orbán, has such an iron grip on his MPs that if he told them to argue black is white, it would surprise no one if they did so. Also, if not liking the things others say about you is to be the test for gaining your approval, Hungary seems unlikely to ever agree to anything ever again. That said, it is precisely the argument the country has deployed on another NATO-related matter, with Minister of Foreign Affairs and Trade Péter Szijjártó insisting the government cannot support Dutch Prime Minister Mark Rutte’s bid to head up the military alliance.

“We certainly can’t support the election of a man to the position of NATO’s secretary general, who previously wanted to force Hungary on its knees,” Reuters quoted Szijjártó as saying, a reference to statements made by Rutte during the many arguments between Hungary and the EU over rule-of-law concerns.

Orbán has never given the impression of worrying too much about what the rest of the world thinks of him (with the possible exceptions of Donald Trump and Vladimir Putin). Still, he presumably wanted to get something in return for agreeing to Sweden joining NATO. In the aftermath of Turkey’s approval, Sweden’s PM visited Budapest, did not speak to parliament, but did agree to an arms deal with Orbán, which will, among other things, boost Hungary’s fleet of Gripen fighters by four aircraft. And then parliament voted its approval. Perhaps that was the calculus all along.

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This issue of the Budapest Business Journal also deals with another of life’s certainties: taxes (and accountants). Our Market Talk survey shows that many players feel the introduction of eVAT will likely be hugely impactful. It is a reminder that, like the National Bank of Hungary and green finance, the digitization of the tax environment is an area where Hungary is carving out a pioneering role. It’s not new to the game, either. You can trace its development back to the (admittedly not flawless) introduction of shop tills connected directly to Hungary’s National Tax and Customs Administration. Not that Hungary’s system is perfect; far from it. Asked what changes they would like to see, our panel suggested an end to special taxes, closer alignment with IFRS, closer following of trends like cybercurrencies, and, unsurprisingly, less administration and over-regulation and fewer bureaucratic burdens. I wouldn’t hold my breath on that last one. People have been asking for that since the Dual Monarchy and probably before.

Robin Marshall

Editor-in-chief

This editorial was first published in the Budapest Business Journal print issue of March 8, 2024.